Dunn, Stephen Fraser v Australian Society of Certified Practising Accountants [1996] FCA 1193

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 194 of 1996

BETWEEN: STEPHEN FRASER DUNN

Appellant

AND: AUSTRALIAN SOCIETY OF CERTIFIED PRACTISING ACCOUNTANTS

Respondent

JUDGES: LOCKHART, HILL AND TAMBERLIN JJ

DATE: 29 NOVEMBER 1996

PLACE: SYDNEY

REASONS FOR JUDGMENT LOCKHART J: This is an appeal from the judgment of a Judge of the Court, Whitlam J, given on 2 February 1996, dismissing the appellant's application with costs. His Honour also dismissed a cross-claim of the respondent and did so with no order as to costs of the cross-claim. No cross-appeal has been lodged by the respondent from the dismissal of the cross-claim but the appellant challenges the making of no order as to the costs of the cross-claim. He says that as the cross-claim was dismissed he ought to have the benefit of an order for costs at first instance against the respondent. The facts are in a narrow compass and I shall mention those that are material for the purposes of the appeal. I rely to a substantial degree in stating the relevant facts upon the findings of the learned primary Judge. The appellant is the sole proprietor of an unincorporated practice providing accounting services to the public. He is a registered tax agent under the Income Tax Assessment Act 1936 (Cth) and in the course of his practice he prepares and lodges income tax returns. The respondent is a company limited by guarantee which is established for a number of purposes including the purpose of advancing the interests of accountants who are it's members. One of it's objects is to confer qualifications designating the status of its members and one class of it's members is called Certified Practising Accountants, which have been described throughout the case by the abbreviation "CPA". The respondent's by-laws state that the initials "CPA" may be used after the name of one of it's members in order to designate that status. The appellant is not a member of the respondent. The appellant sought declarations and injunctions under the Trade Practices Act 1974 (Cth) ("the Act"). He alleged that the respondent had contravened ss 45(2), 52(1) and 53(aa) and (c) of the Act. A case was fought at first instance on the pleadings and they of course, govern the conduct of the appeal as well. The conduct which is said to constitute the misleading or deceptive conduct for the purposes of section 52 of the Act are, as I read them, essentially the same representations that are alleged under ss 53(aa) and (c). Those paragraphs themselves refer to conduct which constitutes in the case of 53 (a), false representation, and (c) a certain representation. So the making of representations is the genesis of the case based on both ss 52 and 53 (aa) and (c). The representations are alleged to have been made in advertisements published by the respondent promoting the services of its members. The statement of claim singles out "tax agency services" which the appellant describes as the business of preparing and lodging tax returns by taxpayers with the Australian Taxation Office and of performing auxiliary services to that service. The primary Judge stated that, in the statement of claim and in the conduct of his case, the appellant alleged that the respondent made the following three representations. And they do indeed, echo paragraphs 14, 15 and 16 of the statement of claim. They are as follows: "(1) That the quality of service, in particular the quality of tax agency services, provided by a person who is not entitled to use the name and title 'CPA', was inferior to the quality of service provided by a person who was entitled to call himself or herself a 'CPA';. (2) That persons offering tax agency services other than persons authorised by it to use the name or style 'CPA', were not governed or regulated by professional or ethical standards such as might protect taxpayers from incompetent or otherwise unsuitable providers of tax agency services. (3) That a person who was not using the name or style 'CPA', was not capable of offering services in relation to personal or business affairs." The primary Judge stated that the representations where alleged to have been made in a number of advertisements. He said: "Although approximately thirty different print advertisements were admitted in evidence in the applicant's case, he does not rely at all on over half of them. As to the others, the applicant presses his case by placing them in three groups. All of these advertisements concluded with the respondent's name, logo and coat of arms. Such devices were occasionally accompanied by a marketing slogan which varied annually, for example, 'The New Breed' or 'Profit from our experience'." The appellant has challenged all of the findings made by the primary Judge concerning the advertisements to which he made specific reference, which are almost all of them. There are one or two that are not specifically referred to by his Honour, to which I shall briefly come in a moment, but in my view the submission of counsel for the respondent is to be accepted. That is, that the case was conducted before his Honour on the basis of the advertisements to which his Honour did make specific reference and is consistent with the passage from his Honour's judgment which I have cited above. I have examined each of the advertisements on which the appellant relied at the trial and on appeal. His Honour found that the representations alleged in the statement of claim could not be inferred from any of the advertisements and were not otherwise established. In my opinion his Honour did not err in those findings. One of the advertisements to which his Honour did not make specific reference was an advertisement at page 246 of the appeal book and two others which appear at pages 252 and 253 of the appeal book. I have read them and in my opinion the findings made by his Honour concerning the advertisements to which he made specific reference apply also to those advertisements to which I have just referred. Bearing in mind, in particular, that the question before the primary Judge was whether any one of those three representations to which I have already referred can be gleaned from any of the relevant advertisements; in my opinion, they cannot. Further, in my view, there is insufficient probative evidence to establish that any of the representations which are said to have been made within those three categories to which I have referred were false. For those two independent reasons in my view, the appeal from his Honour's judgment concerning Part V of the Act must fail. I turn to the submissions made by the appellant concerning s 45(2) of the Act. I should say at this stage that the appellant was represented by senior and junior counsel at the trial but has appeared for himself on the hearing of this appeal. As I understand it, he has no legal qualifications but if I may say so, I thought he argued his appeal ably. The appeal from his Honour's judgment relating to Part IV of the Act is based on ss 45(2)(a)(i) and (b)(i). Those provisions essentially state that a corporation shall not make a contract if the proposed contract contains an exclusionary provision, or give effect to a provision if it is an exclusionary provision. That is the prohibition section. The critical question is the meaning of the words "exclusionary provision"; and they are defined in s 4D of the Act in essence as provisions in an agreement between competitors which have the purpose of either, restricting the supply of services by all or any of those competitors to particular persons or classes of persons, or restricting the acquisition of services by all or any of those competitors from particular persons or classes of persons. So the critical question on this aspect of the case is whether the definition in s 4D has application. The appellant alleged that two by-laws of the respondent which were made pursuant to its Articles of Association, constitute exclusionary provisions. Those by-laws are By-Law 711 and By-Law 713 and they relevantly provide: "711.1 a member who holds a current Public Practice Certificate may practise in partnership with: (a) any other member of the Society who holds a current Public Practice Certificate; or (b) a member of any other body of accountants recognised by the Society and listed in Schedule 5 and who holds a current Certificate of Public Practice; or (c) a practice company approved by National Council in accordance with By-Law 901; or (d) such other persons as National Council or its delegate may approve on such terms and conditions as National Council may decide. 713 A member may undertake employment or be otherwise associated with an organisation which provides public accounting services, the owners or operators of which are not members of the Society or a body recognised by the Society or otherwise authorised, provided that he does not acquire a financial interest in the organisation and provided that he signs the accounting work performed by him, on behalf of the organisation, and not in his own name. A member in this position will be held responsible for observing the Society's Code of Professional Conduct to the same extent as members who are in public practice on their own account." As his Honour noted in his reasons for judgment, the Public Practice Certificate referred to in By-Law 711.1 is a certificate issued by the respondent's National Council. The by-laws provide that a member shall not be permitted to practice as a principal in public practice unless he holds such a certificate or a public practice certificate issued by the Institute of Chartered Accountants in Australia. It is important to turn to the statement of claim and see how the appellant has pleaded and at the trial conducted it's case on this question of the application of s 4D. The critical assertion is made in paragraphs 20 and 21 (see also paragraphs 25 and 27). The relevant allegation is essentially that at least two members of the respondent are competitive with each other, or would be, but for By-Laws 711 and 713, in the supply or acquisition of the services of entering into partnership arrangements in the conduct of accountancy practices. The primary Judge did not find it necessary to determine the question of whether entering into partnerships is a service that may be the subject of supply or acquisition within the meaning of section 4D of the Act. His critical finding was that: "the evidence did not establish that members of the respondent would, but for the impugned by-laws be competitive with one and other in relation to such supply or acquisition." I have no difficulty accepting the proposition for which the appellant contended that members of the respondent are competitive with each other in the supply of services to the public, indeed, that was admitted at the trial by counsel for the respondent. But there is another proposition that the effect of the by-laws is essentially to restrict members of the respondent from entering into partnership or other forms of association with persons who are not Certified Practising Accountants. That seems to me to be the nub of the case so far as the application of section 4D is concerned. I am satisfied that the primary Judge did not err in his finding that there is no evidence to support the allegation in the statement of claim that the relevant members of the respondent are competitive with each other, or would but for the by-laws be competitive with each other in the supply or acquisition of the relevant services, namely, entering into partnership arrangements in the conduct of accountancy practices. I do not therefore find it necessary to deal with the two other arguments that have been advanced by counsel for the respondent before us; first, that the services alleged in the statement of claim are not services in the sense that they are not conferred in trade or commerce; and, secondly, that the services alleged in the statement of claim do not fall within the definition of services in other respects. There remains the question of the challenge to the primary Judge making no order as to the costs of the cross‑claim. Where there is an appeal from the judgment of a primary Judge and the appeal involves the exercise of discretion by the primary Judge, it is of course well established that the court will not interfere, unless an error of the kind referred to in House v R (1936) 55 CLR 499, at 504-5, is shown to have been made in exercising the discretion or unless the court is persuaded that the decision stands outside the limits of a sound discretionary judgment. See Transport Workers Union v Leon Laidely Pty Limited (1980) 43 FLR 168. His Honour said in the concluding sentence of his judgment, after referring to the cross-claim: "Nonetheless the cross-claim occupied little time during the hearing and it will be dismissed with no order as to costs." In my opinion it has not been established that his Honour erred in making no order as to costs concerning the cross-claim. That leaves the question of the costs of the appeal. The appellant has failed in his appeal, but the issues do raise questions that concern the public, and are not merely questions as between parties with pecuniary or other interests. I think the fair orders for costs on the appeal is that the appellant should pay one half of the costs of the respondent of the appeal. I would therefore dismiss the appeal and order the appellant to pay one half of the respondent's costs of the appeal.